Economists look at the same data in different ways and come to different conclusions. National trends do not always reflect state or even local conditions.
Take new home sales. Lawrence Yun, chief economist for the National Association of Realtors (NAR), reports in an article for NAR that he expects “new home sales to lag behind in the recovery as compared to existing home sales.”
He believes that cost is the deciding factor. Costs associated with building have gone up while existing home prices have fallen.
New home builders simply cannot lower their prices to compete with the pressures placed on existing homes, especially ones that face foreclosures. Demand for new homes is overshadowed by the search for the perfect deal.
Statistics in Washington, especially here on the Eastside, are in direct conflict to his projections.
Numbers of sales indicate that buyers are willing to pay more to get a quality home in new neighborhoods that are not plagued by instability of foreclosed homes. With an understanding that new construction comes with new regulations for energy efficiency, buyers believe that what they will actually save on energy bills will compensate for the added cost.
Many Realtors and mortgage brokers are still reporting long delays and failures to close, which is moving many buyers away from short sales and foreclosures. Many are frustrated by the major repairs that must be done before moving in. On a recent tour of homes in the Issaquah Maple Valley area, three of the seven homes I visited were short sales. Although similar in price, the condition of the homes was vastly different.
Some home builders are reporting increased activity in many of the Eastside subdivisions. Jolyn Davis, vice president of marketing for The Burnsteads, reports brisk sales on the Eastside. Illahee, a development of 108 homes in Sammamish, recently received a contract for the last home. The Woods at Beaver Lake and the Bridges at Talus also are doing well, builders said. Sales have doubled from July of last year. Davis credits the increase to low interest rates and incentives provided by Burnstead. Many of Davis’ buyers are relocating to the area.
Roy Towse, who represents The Crossings at Pine Lake, a Lozier development in Sammamish, also reported an increase in sales. He believes that four sales in the last several weeks are a positive sign in the economy.
Tom Covello, an Issaquah Windermere Realtor who represents Laurel Hill, a Murray Franklin development, has seen 15 sales in 19 weeks. Murray Franklin is also looking at ways to provide water saving efficiency to their homes, he said.
These builders highlight energy efficiency in their homes. Davis notes that homebuyers are paying attention to the degree of energy efficiency before making a decision.
Permits for new construction have risen dramatically from last year in both the and the city of Issaquah, according to their planning departments. Both cities comply with the Washington State Energy Code, which is one of the most stringent in the country.
In Sammamish, according to Northwest Multiple Listing Service figures, there are 52 new construction homes listed from $399,990 to $2,995,000. In the last six months, 65 homes have sold. Issaquah presently has 50 new construction homes for sale from $650,000 to $2,498,000. In the last six months, 49 homes have sold.
Whatever the reason for the increase in new home sales - energy efficiency, closeness to Microsoft or a drift away from the problems associated with short sales - cities welcome the influx of residents and the sales tax they bring. Contractors welcome the ability to provide jobs in this economy.
It is not surprising that buyers on the Eastside are looking for ways to protect the environment since many move here to take advantage of all the possibilities for outdoor recreation. And, it is not surprising that home builders are looking for ways to capture buyers. If you are considering buying new construction, ask the builder to explain the advantages of purchasing a home that provides some degree of energy efficiency.
Joan Probala is the managing broker for Issaquah Windermere (Windermere Real Estate/East Inc.). She has 30 years of experience in real estate, construction and sales.